International credit rating agency Standard & Poor’s announced on Friday that it was affirming Israel’s AA rating, further giving the economy a “stable outlook,” despite the recession triggered by the coronavirus pandemic.

Israel’s gross domestic product shrunk by an annualized 28.7 percent in the second fiscal quarter of 2020 and, together with faltering performance over the first quarter, which was severely impacted by the outbreak of the coronavirus in Israel, it has caused the economy to contract 10.1 percent over the first six months, the Central Bureau of Statistics said last week.

Still, S&P’s counterpart Moody also recently reaffirmed Israel’s credit ratings as A1.

S&P cited Israel’s robust economy, flexible monetary policy, a relatively strong pool of local savings, and its access to domestic and international capital markets.

The agency further noted that the peace deals with the United Arab Emirates and Bahrain were likely to lead to economic cooperation, increased commerce and better security for the three countries.

S&P estimated that Israel’s economy will shrink by 5 percent in 2020 over the pandemic, its biggest drop in decades, but will recover more than 4.5 percent in 2021, the Globes business daily reported.

The International Monetary Fund predicted that the Israeli economy will shrink by 6.3 percent in 2020, adding it does not believe Israel’s GDP would be able to return to its pre-pandemic level until 2022.

The agencies’ position refuted concerns expressed by Finance Ministry officials who warned that the delays in passing a state budget could jeopardize Israel’s ranking.

Finance Minister Israel Katz lauded the decision, saying, “The decision by S&P to keep the State of Israel’s credit rating at AA-, with a stable outlook, is a great expression of trust in Israel’s economy and a mark of praise for the State of Israel. Israel is in a good position in relation to many countries in the world that are struggling with the coronavirus crisis.”

Israeli Prime Minister Benjamin Netanyahu welcomed “another impressive vote of confidence in the economic policy that we have been leading.” He noted that Standard and Poor’s has lowered its credit rating for other developed countries during the pandemic.

This article first appeared in Israel Hayom.

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